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The story we published 20 years after Black Monday

As Neal J. Baumann arrived for his regular shift at a small White Plains, N.Y., brokerage on Oct. 19, 1987, he discovered that the mood on Wall Street didn't match the pleasant weather outdoors. Panic selling

Here's the story we published Oct. 19, 2007, on the 20th anniversary of Black Monday. The story was written by John Waggoner, personal finance columnist.

As Neal J. Baumann arrived for his regular shift at a small White Plains, N.Y., brokerage on Oct. 19, 1987, he discovered that the mood on Wall Street didn't match the pleasant weather outdoors.

Panic selling that day would push the Dow Jones industrial average down 68 points by 10 a.m, 143 points by noon, 272 points by 2 p.m. and an unprecedented 508 points at the market's close.

"It was a total shock," said Baumann, who had been a stockbroker for just one year. "No one saw a drop of that magnitude coming. By noon, it really started to sink in that it was going to be a bad day."

Twenty years later, the crash known as "Black Monday" remains the second worst day in the Dow's history as measured by the percentage decline. The 22.6% plunge was nearly twice the drop of the October 1929 crash that was the prelude to The Great Depression. Only a 24.4% drop on Dec. 12, 1914, was worse.

What Baumann remembers most about that day was making nearly 100 calls to clients before he went home exhausted at about 9 p.m.

"The day went by in a complete blur," said Baumann, 53, of Armonk, N.Y. "When it became apparent that the market would be down that badly, it was important to speak to clients just to hold their hands and tell them that it will be OK and to hold on."

Peter Antonelli was a senior at Villanova University in Philadelphia at the time of the crash. His biggest worry after Black Monday was paying for that last year of college. That's because the mutual funds that helped pay for the tuition and other campus expenses for Antonelli and his twin brother had fallen 20% during the crash. A student loan helped make up for the losses.

"I remember my dad saying how am I going to pay for the tuition with the stock market down so much," Antonelli recalled. "It was the only time that I heard my dad speak about money."

David T. Shipper was the manager of the E.F. Hutton branch on Main Street in downtown White Plains on Black Monday. News of the carnage spread slowly because the modern tools of instantaneous communications -- cell phones, Internet access, BlackBerries and cable business channels -- were either rarities or nonexistent in 1987. Some people didn't learn that the Dow tanked until they got home that night and listened to the evening news.

Nevertheless, a parade of dazed investors stopped by the Hutton office to keep tabs on the debacle.

"People were calling and stopping by to ask what they should do," Shipper said. "Obviously the advice we gave in those days was that the worst thing you can do is panic. We told people to wait until the dust settles and see what happens."

The biggest victims of the crash were investors who had bought stocks on margin using borrowed money. Many had to sell stocks at a deep loss in a depressed market to cover margin calls.

"Many of those investors were wiped out," said David Geller, president of Geller Capital Management in White Plains, who worked as a broker in 1987. "To them, it may have seemed like the end of the world."

In the end, Black Monday was a temporary obstacle on the road to the bull market and tech boom of the 1990s that made the retirements more secure for millions of Americans. By January 1989, the market had recovered all of the losses from the crash. The Dow recently topped 14,000 -- a gain of about 700% since closing at 1,738.74 on Black Monday.

The gains have been good news for the five of 10 U.S. households invested in stocks, up from 2 of 10 households in 1986.

Baumann is among the legion of investment managers who have enjoyed long careers through the market's impressive run. He currently is the vice president and branch manager for A.G. Edwards in White Plains.

"I remember later that year or the year after the crash, John Templeton of the Templeton Funds, a wonderful, wonderful gentleman, was on 'Wall Street Week with Louis Rukeyser,'" Baumann said. "And he said the market will be at 10,000 by the year 2000. I remember shaking my head and saying 'This can't be.' People sort of laughed at him. But the rest is history. He was right."